Ethereum Moves Close to Long-Wanted Solution to Reduce Power Consumption by Over 99% – fr

Ethereum Moves Close to Long-Wanted Solution to Reduce Power Consumption by Over 99% – fr

Users and developers of the world’s most widely used blockchain have struggled with its carbon footprint problem for as long as it has existed. Now, they say, several recent advancements will finally allow them to significantly reduce their energy use in a year or less.
Ethereum and Bitcoin, its more well-known rival, both operate using a proof-of-work system that requires a global network of computers operating 24 hours a day. Ethereum software developers have been working for years to shifting the blockchain to what’s called a proof of stake system – which uses an entirely different approach to securing the network, which also eliminates the issue of carbon emissions.

The change – delayed by complicated technical setbacks – couldn’t come soon enough for the cryptocurrency world, which weathered one of its biggest bouts of volatility this month after Elon Musk announced. that Tesla Inc. would stop accepting Bitcoin as payment for cars. due to increasing energy consumption. Bitcoin’s network currently uses more energy per year than Pakistan or the United Arab Emirates, according to the Cambridge Bitcoin Electricity Consumption Index. Index compilers do not measure Ethereum’s power consumption.

“The move to proof of stake has become more urgent for us due to the growth of crypto and Ethereum over the past year,” Vitalik Buterin, inventor of Ethereum, said in a statement. interview. He hopes the change will be made by the end of the year, while others say it will be in place by the first half of 2022. That’s about a year earlier than expected in December. .

“I’m really, really happy that one of blockchain’s biggest problems will go away when the proof of stake is complete,” said Buterin, who has been advocating for this change since blockchain launched in 2015. “It’s amazing .

The change could help raise the price of Ether cryptocurrency, which is needed to use Ethereum, as environmentally conscious investors take note of its much smaller carbon footprint. Much of the criticism of proof of work has come from millennials and investors who value positive environmental, social, and governance, or ESG, standards.

“It’s hard to ignore that the ESG narrative is going to be big,” said Wilson Withiam, analyst at Messari specializing in blockchain protocols. “If you see Ether as an investment, it’s not imminent.”

Pantera Capital, one of the first Bitcoin investment firms, agreed. “Ethereum has a massive ecosystem of decentralized finance use cases with rapidly growing adoption,” wrote Dan Morehead, founder of Pantera, in a May 10 note to investors. “Combine these two dynamics and we believe Ethereum will continue to gain market share over Bitcoin.”

The transition that Ethereum developers are making is a colossal undertaking. They need to create, test, and implement a whole new way to secure their network while maintaining the existing blockchain. Then when the time comes, they’ll merge the existing blockchain into the new architecture that uses proof of stake to verify transactions. The change will also dramatically increase the speed of transactions Ethereum can process, making it more competitive with established payment networks like Visa or Mastercard.

Proof of work uses the investment costs of purchasing and maintaining computer hardware as well as electricity to run them as economic investments that must be paid for by the people who secure the network, known as miners. . In return, the first miner to verify the last batch of Bitcoin or Ethereum transactions is rewarded with free Bitcoin or Ether.

This system has been the subject of fierce criticism for years, most recently by Musk, who called recent consumer trends “crazy.”

As proof of stake, Ether cryptocurrency replaces hardware and electricity as the cost of capital. A minimum of 32 Ether is required for a user to bid on the new network. The more Ether a user puts in, the more likely they are to be chosen to secure the next batch of transactions, which will be rewarded with a free, albeit smaller amount of Ether just like proof of work.

So far, over 4.6 million Ether has been staked in what is known as the Beacon Chain, worth around US $ 11.5 billion at an ether price of 2503 US dollars. This means that once the proof of stake is in place, the only cost of electricity will come from the servers that host Ethereum nodes, just like any business using cloud computing.

“No one is talking about Netflix’s environmental footprint because they only run servers,” said Tim Beiko, who coordinates the work of developers on the Ethereum Foundation’s new network, set up to fund and oversee the development of the Ethereum protocol.

Danny Ryan, a researcher at the foundation, said Ethereum’s proof of work uses 45,000 gigawatt hours per year. With proof of stake, “you can verify a blockchain with a consumer laptop,” he said. “By my estimates, you would see 1 / 10,000th of the energy than the current Ethereum network.”

One of the first breakthroughs came when developers created a system where contracts on Ethereum can be executed off the main chain, known as roll ups. This greatly reduces the pressure and demand from the main underlying network, and also means that fewer changes need to be made to the network.

The next jump was related to the roll ups. The move to a new Ethereum, known as ETH 2.0, has always envisioned the network being divided into 64 geographic regions in what is known as sharding. Transactions on a partition would then be reconciled with the main network which is tied to all the other partitions, making the overall network much faster. Yet it was a complicated and delicate security issue and it was slowing progress.

Once the rollups could be used for transactions, that meant the shards were only needed to house the data, Beiko said. In the previous model, the partitioning system should have been up and running before Ethereum could move on to proof of stake. This is no longer the case, he said.

“The sharding goes from very complicated to not too complicated,” said Beiko. “It is no longer a blocker in the roadmap. “

Roll ups are limited by the amount of blockchain-related data they can hold, Buterin said. This was a problem before developers realized that shards could contain data.

“If you can post data to the channel, which you can do with chunks, then the scale goes up dramatically,” Buterin said.

Advances in proof of stake were recently shown by a test network where transactions on the existing Ethereum blockchain were successfully merged with the proof of stake system, Beiko said.

“I am more confident than a month ago,” he said. “There are a bunch of non-trivial issues to be solved, but the fundamental architecture is defined and quite promising. ”


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